Sessions announces DOJ will not defend the constitutionality of the individual mandate

On June 7, 2018, Attorney General Jeff Sessions notified Paul Ryan, Speaker of the House of Representatives, that, with the approval of President Trump, the Department of Justice (DOJ) will not defend the constitutionality of individual mandate (26 U.S.C. §5000A(a)) in a case challenging the constitutionality of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) (see Texas v. United States, Civil Action No. 4:18-cv-00167-O). The DOJ will argue that certain provisions of the ACA are inseverable from individual mandate provision. According to Sessions, the plaintiffs in Texas v. United States are correct that §5000A(a) will be unconstitutional when the Tax Cuts and Jobs Act of 2017 (P.L. 115-97) (Jobs Act) amendment to §5000A becomes effective January 1, 2019. He added that "the Department's decision not to defend §5000A(a)'s constitutionality will not prevent the court in Texas v. United States from resolving the question, given the posture of the case."

On June 8, 2018, Sessions informed the Northern District of Texas District Court that the DOJ would not be defending the constitutionality of the Obamacare mandate. According to Sessions, "it is a rare step but a necessary one when it comes to this monumental and historic governmental move in the American healthcare system."

The lawsuit. Twenty states filed a lawsuit against the federal government challenging the constitutionality of the ACA after §11081 of the Jobs Act eliminated the individual mandate’s tax penalty, but left the individual mandate in place. Section 11081 amended §5000A(c) by reducing the monetary penalty, which was imposed for noncompliance with Section §5000A(a), to $0 and the tax penalty to zero percent. The states argued that the Supreme Court narrowly upheld the core provision of the ACA—the individual mandate, created by ACA §1501—as a tax, but also ruled that without the tax penalty, the mandate that individuals purchase health insurance was an unconstitutional exercise of federal power. The state’s argued that the ACA is not severable, and since "the Supreme Court has already held that Congress has no authority to impose such a mandate on Americans, absent invoking its taxing authority, the ACA is now unconstitutional." (see 20 states seek repeal of entire ‘unconstitutional and irrational’ ACA, February. 28, 2018). In addition to the request for declaratory judgment on the constitutionality of the ACA, the suit seeks a preliminary injunction prohibiting federal officials from implementing or enforcing the ACA.

Federal defendants’ response. In its response to the plaintiff’s request for preliminary injunction, the DOJ noted and the plaintiffs agreed that the preliminary injunction was not warranted because the injury imposed by the mandate is not sufficiently imminent to warrant preliminary injunctive relief. According to the DOJ, the case presents a pure question of law. Therefore, it asked the court to consider construing the plaintiff’s motion for preliminary injunction as a request for summary judgment and then enter a declaratory judgment concluding that the ACA’s provisions establishing that (1) the guaranteed issue and community-rating requirements provisions are inseverable from the individual mandate, and (2) the mandate and the guaranteed issue and community requirements are unconstitutional and invalid as of January 1, 2019. The DOJ concluded, however, that the remainder of the ACA can stand despite the invalidation of these provisions.

To support its position, the DOJ contended that "the individual mandate requirement is essential to the operation of the guaranteed-issue and community-rating provisions" and argued that enforcing these two provisions without an individual mandate would allow individuals to game the system. Specifically, many individuals would wait to purchase health insurance until they needed care.

The intervenor-defendants’ position. The intervenor-defendants contend that the court should deny the plaintiffs’ application for preliminary injunction. The intervenor-defendants maintain that the plaintiffs have not established the four prerequisites for obtaining a preliminary injunction, for the following reasons:

First, the plaintiffs are unlikely to succeed on the merits of their legal claims because (1) even though the Job Act reduced the tax to $0, a lawful tax is not required to produce revenue at all times, and (2) the plaintiffs’ claims are not ripe because the minimum essential coverage requirement will continue to produce revenue for years to come.

Second, the plaintiffs’ cannot show irreparable harm because it is legal for them to pay $0 tax instead of obtaining ACA-compliant insurance and plaintiff states are not harmed by the reduction of a tax that did not apply to them.

Third, any injury to the plaintiffs caused by the individual mandate is far outweighed by the harm to defendant states and their citizens if the ACA is enjoined.

Finally, a preliminary injunction would upset the status quo and create chaos in the health care market for patients, providers, insurance carriers as well as the federal and state governments.

DOJ attorneys’ withdrawal. At the time of Sessions’ announcement, three Civil Division DOJ attorneys, Joel McElvain, Eric Beckenhauer, and Rebecca Kopplin filed a motion to withdraw their appearances on behalf of the federal defendants in this case pursuant to N.D. Texas district court, Civil Rule 83.12(a). The federal defendants will continue to be represented by other counsel of record from the DOJ. Plaintiffs and the Intervenor-Defendants did not object to the motion (Texas v. United States, June 7, 2018).

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